Complete salary break-up asked in new ITR-2 return form

The Income Tax Department (ITD) has recently released ITR 2 excel utility applicable for the FY 2018-19. ITR 2 form is used by the individuals having salary income more than Rs 50 lakh, capital gains or more than one house property. The individuals having income from business/profession will not use ITR 2 form for filing their income tax returns. ITR 2 is the second most popular return form used for filing ITRs after ITR 1.

The format in which salary details are required to be filled in ITR 2 is in sync with the details given in Form 16. However, the new ITR 2 format asks for salary break up in much more detail than previously required. These details are even exhaustive than the ones required in the new Form 16. Also, there is an ambiguity about whether the new Form-16 will have such a detailed break-up or not.

Also read: Disclosure of details of other income in ITR-1 for AY 2019-20 (FY 2018-19)

If the new Form 16 doesn’t provide the salary break up as required in ITR 2 form then it will be a difficult task for the salaried individuals to collect the relevant figures and file their returns. However, the individuals can collect the figures from their pay slips, payroll software, etc. and fill the return form.

All the allowances received from the employer during an FY will have to be filled separately by the salaried individuals; to serve this purpose, the new ITR 2 format has been embedded with a drop-down menu giving 17 options such as basic salary, dearness allowance, house rent allowance, gratuity and so on. The individuals will have select the correct nature of salary along with the amount received as depicted in the image below:

Form 16 and salary schedule in the ITR forms have been updated to bring uniformity between the two. The ITR 2 filing utility requires the details of commonly used components of salary such as basic salary, HRA, LTA, Children education allowance, etc. Though, the newly notified Form 16 contains only one field for the aggregate amount of salary taxable under Section 17(1).

Whether an employer will be required to provide the salary break up in new Form 16?- This will be clarified only when the tax department releases TDS return filing utility for Quarter 4 for FY 2018-19.

These changes in the new ITR 2 return form will help the government to keep track of the income earned, deductions claimed and tax outflow by salaried individuals in a particular FY.